Costs and economic potential

The stringency of future requirements for the control of greenhouse gas emissions and the expected costs of CCS systems will determine, to a large extent, the future deployment of CCS technologies relative to other greenhouse gas mitigation options. This section first summarizes the overall cost of CCS for the main options and process applications considered in previous sections. As used in this summary

and the report, “costs” refer only to market prices but do not include external costs such as environmental damages and broader societal costs that may be associated with the use of CCS. To date, little has been done to assess and quantify such external costs. Finally CCS is examined in the context of alternative options for global greenhouse gas reductions.

Cost of CCS systems

As noted earlier, there is still relatively little experience with the combination of CO₂ capture, transport and storage in a fully integrated CCS system. And while some CCS components are already deployed in mature markets for certain industrial applications, CCS has still not been used in large-scale power plants (the application with most potential).

The literature reports a fairly wide range of costs for CCS components (see Sections 3–7). The range is due primarily to the variability of site-specific factors, especially the design, operating and financing characteristics of the power plants or industrial facilities in which CCS is used; the type and costs of fuel used; the required distances, terrains and quantities involved in CO₂ transport; and the type and characteristics of the CO₂ storage. In addition, uncertainty still remains about the performance and cost of current and future CCS technology components and integrated systems. The literature reflects a widely-held belief, however, that the cost of building and operating CO₂ capture systems will decline over time as a result of learning-by-doing (from technology deployment) and sustained R&D. Historical evidence also suggests that costs for first-of-a-kind capture plants could exceed current estimates before costs subsequently decline. In most CCS systems, the cost of capture (including compression) is the largest cost component. Costs of electricity and fuel vary considerably from country to country, and these factors also influence the economic viability of CCS options.

Table TS.9 summarizes the costs of CO₂ capture, transport and storage reported in Sections 3 to 7. Monitoring costs are also reflected. In Table TS.10, the component costs are combined to show the total costs of CCS and electricity generation for three power systems with pipeline transport and two geological storage options.

For the plants with geological storage and no EOR credit, the cost of CCS ranges from 0.02–0.05 US$/kWh for PC plants and 0.01–0.03 US$/kWh for NGCC plants (both employing post-combustion capture). For IGCC plants (using pre-combustion capture), the CCS cost ranges from 0.01–0.03 US$/kWh relative to a similar plant without CCS.

For all electricity systems, the cost of CCS can be reduced by about 0.01–0.02 US$/kWh when using EOR with CO₂ storage because the EOR revenues partly compensate for the CCS costs. The largest cost reductions are seen for coal-based plants, which capture the largest amounts of CO₂. In a few cases, the low end of the CCS cost range can be negative,

indicating that the assumed credit for EOR over the life of the plant is greater than the lowest reported cost of CO₂ capture for that system. This might also apply in a few instances of low-cost capture from industrial processes.

In addition to fossil fuel-based energy conversion processes, CO₂ could also be captured in power plants fueled with biomass, or fossil-fuel plants with biomass co-firing.

At present, biomass plants are small in scale (less than 100 MW_e). This means that the resulting costs of production with and without CCS are relatively high compared to fossil alternatives. Full CCS costs for biomass could amount to 110 US$/tCO₂ avoided. Applying CCS to biomass-fuelled or co-fired conversion facilities would lead to lower or negative¹³ CO₂ emissions, which could reduce the costs for this option, depending on the market value of CO₂ emission reductions.

Similarly, CO₂ could be captured in biomass-fueled H₂ plants. The cost is reported to be 22–25 US$/tCO₂ (80–92 US$/tC) avoided in a plant producing 1 million Nm³ day^-1 of H₂, and corresponds to an increase in the H₂ product costs of about 2.7 US$ GJ^-1. Significantly larger biomass plants could potentially benefit from economies of scale, bringing down costs of the CCS systems to levels broadly similar to coal plants. However, to date, there has been little experience with large-scale biomass plants, so their feasibility has not been proven yet, and costs and potential are difficult to estimate.

The cost of CCS has not been studied in the same depth for non-power applications. Because these sources are very diverse in terms of CO₂ concentration and gas stream pressure, the available cost studies show a very broad range. The lowest costs were found for processes that already separate CO₂ as part of the production process, such as hydrogen production (the cost of capture for hydrogen production was reported earlier in Table TS.4). The full CCS cost, including transport and storage, raises the cost of hydrogen production by 0.4 to 4.4 US$ GJ^-1 in the case of geological storage, and by -2.0 to 2.8 US$ GJ^-1 in the case of EOR, based on the same cost assumptions as for Table TS.10.

Cost of CO₂ avoided

Table TS.10 also shows the ranges of costs for ‘CO₂ avoided’.

CCS energy requirements push up the amount of fuel input (and therefore CO₂ emissions) per unit of net power output.

As a result, the amount of CO₂ produced per unit of product (a kWh of electricity) is greater for the power plant with CCS than the reference plant, as shown in Figure TS.11.

To determine the CO₂ reductions one can attribute to CCS, one needs to compare CO₂ emissions per kWh of the plant with capture to that of a reference plant without capture. The difference is referred to as the ‘avoided emissions’.

Table TS.9. 2002 Cost ranges for the components of a CCS system as applied to a given type of power plant or industrial source. The costs of the separate components cannot simply be summed to calculate the costs of the whole CCS system in US$/CO2 avoided. All numbers are representative of the costs for large-scale, new installations, with natural gas prices assumed to be 2.8-4.4 US$ GJ^-1 and coal prices 1-1.5 US$

GJ^-1.

CCS system components Cost range Remarks

Capture from a coal- or gas-fired

power plant 15-75 US$/tCO2 net captured Net costs of captured CO2, compared to the same plant without capture.

Capture from hydrogen and ammonia production or gas processing

5-55 US$/tCO2 net captured Applies to high-purity sources requiring simple drying and compression.

Capture from other industrial sources 25-115 US$/tCO2 net captured Range reflects use of a number of different technologies and fuels.

Transportation 1-8 US$/tCO2 transported Per 250 km pipeline or shipping for mass flow rates of 5 (high end) to 40 (low end) MtCO2 yr^-1.

Geological storage^a 0.5-8 US$/tCO2 net injected Excluding potential revenues from EOR or ECBM.

Geological storage: monitoring and

verification 0.1-0.3 US$/tCO2 injected This covers pre-injection, injection, and post-injection monitoring, and depends on the regulatory requirements.

Ocean storage 5-30 US$/tCO2 net injected Including offshore transportation of 100-500 km, excluding monitoring and verification.

Mineral carbonation 50-100 US$/tCO2 net mineralized Range for the best case studied. Includes additional energy use for carbonation.

a Over the long term, there may be additional costs for remediation and liabilities.

13 If for example the biomass is harvested at an unsustainable rate (that is, faster than the annual re-growth), the net CO2 emissions of the activity might not be negative.

Introducing CCS to power plants may influence the decision about which type of plant to install and which fuel to use. In some situations therefore, it can be useful to calculate a cost per tonne of CO₂ avoided based on a reference plant different from the CCS plant. Table TS.10 displays the cost and emission factors for the three reference plants and the corresponding CCS plants for the case of geological storage.

Table TS.11 summarizes the range of estimated costs for different combinations of CCS plants and the lowest-cost reference plants of potential interest. It shows, for instance, that where a PC plant is planned initially, using CCS in that plant may lead to a higher CO₂ avoidance cost than if an NGCC plant with CCS is selected, provided natural gas is available. Another option with lower avoidance cost could be to build an IGCC plant with capture instead of equipping a PC plant with capture.

Economic potential of CCS for climate change mitigation Assessments of the economic potential of CCS are based on energy and economic models that study future CCS deployment and costs in the context of scenarios that achieve economically efficient, least-cost paths to the stabilization of atmospheric CO₂ concentrations.

While there are significant uncertainties in the quantitative results from these models (see discussion below), all models indicate that CCS systems are unlikely to be deployed on a large scale in the absence of an explicit policy that substantially limits greenhouse gas emissions to the atmosphere. With greenhouse gas emission limits imposed, many integrated assessments foresee the deployment of CCS systems on a large scale within a few decades from the start of any significant climate change mitigation regime.

Energy and economic models indicate that CCS systems Table TS.10. Range of total costs for CO2 capture, transport and geological storage based on current technology for new power plants using bituminous coal or natural gas

Power plant performance and cost parameters^a Pulverized coal

power plant Natural gas combined cycle

power plant

Integrated coal gasification combined

cycle power plant Reference plant without CCS

Cost of electricity (US$/kWh) 0.043-0.052 0.031-0.050 0.041-0.061

Power plant with capture

Increased fuel requirement (%) 24-40 11-22 14-25

CO2 captured (kg/kWh) 0.82-0.97 0.36-0.41 0.67-0.94

CO2 avoided (kg/kWh) 0.62-0.70 0.30-0.32 0.59-0.73

% CO2 avoided 81-88 83-88 81-91

Power plant with capture and geological storage^b

Cost of electricity (US$/kWh) 0.063-0.099 0.043-0.077 0.055-0.091

Cost of CCS (US$/kWh) 0.019-0.047 0.012-0.029 0.010-0.032

% increase in cost of electricity 43-91 37-85 21-78

Mitigation cost (US$/tCO2 avoided) 30-71 38-91 14-53

(US$/tC avoided) 110-260 140-330 51-200

Power plant with capture and enhanced oil recovery^c

Cost of electricity (US$/kWh) 0.049-0.081 0.037-0.070 0.040-0.075

Cost of CCS (US$/kWh) 0.005-0.029 0.006-0.022 (-0.005)-0.019

% increase in cost of electricity 12-57 19-63 (-10)-46

Mitigation cost (US$/tCO2 avoided) 9-44 19-68 (-7)-31

(US$/tC avoided) 31-160 71-250 (-25)-120

a All changes are relative to a similar (reference) plant without CCS. See Table TS.3 for details of assumptions underlying reported cost ranges.

b Capture costs based on ranges from Table TS.3; transport costs range from 0-5 US$/tCO2; geological storage cost ranges from 0.6-8.3 US$/tCO2.

c Same capture and transport costs as above; Net storage costs for EOR range from -10 to -16 US$/tCO₂ (based on pre-2003 oil prices of 15-20 US$ per barrel).

are unlikely to contribute significantly to the mitigation of climate change unless deployed in the power sector. For this

to happen, the price of carbon dioxide reductions would have to exceed 25–30 US$/tCO₂, or an equivalent limit on CO₂ emissions would have to be mandated. The literature and current industrial experience indicate that, in the absence of measures for limiting CO₂ emissions, there are only small, niche opportunities for CCS technologies to deploy. These early opportunities involve CO₂ captured from a high-purity, low-cost source, the transport of CO₂ over distances of less than 50 km, coupled with CO₂ storage in a value-added application such as EOR. The potential of such niche options is about 360 MtCO₂ per year (see Section 2).

Models also indicate that CCS systems will be competitive with other large-scale mitigation options such as nuclear power and renewable energy technologies. These studies show that including CCS in a mitigation portfolio could reduce the cost of stabilizing CO₂ concentrations by 30% or more. One aspect of the cost competitiveness of CCS technologies is that they are compatible with most current energy infrastructures.

In most scenarios, emissions abatement becomes progressively more constraining over time. Most analyses indicate that notwithstanding significant penetration of CCS systems by 2050, the majority of CCS deployment will occur in the second half of this century. The earliest CCS deployments are typically foreseen in the industrialized nations, with deployment eventually spreading worldwide.

While results for different scenarios and models differ (often

Emitted

Reference Plant

Plant with CCS

CO₂ produced (kg/kWh)

Captured

Figuur 8.2

CO₂ avoided

CO₂ captured

Figure TS.11. CO2 capture and storage from power plants. The increased CO2 production resulting from loss in overall efficiency of power plants due to the additional energy required for capture, transport and storage, and any leakage from transport result in a larger amount of “CO2 produced per unit of product” (lower bar) relative to the reference plant (upper bar) without capture.

Table TS.11. Mitigation cost ranges for different combinations of reference and CCS plants based on current technology for new power plants. Currently, in many regions, common practice would be either a PC plant or an NGCC plant^14. EOR benefits are based on oil prices of 15 - 20 US$ per barrel. Gas prices are assumed to be 2.8 -4.4 US$/GJ^-1, coal prices 1-1.5 US$/GJ^-1 (based on Table 8.3a).

CCS plant type

NGCC reference plant PC reference plant US$/tCO2 avoided

(US$/tC avoided) US$/tCO2 avoided

(US$/tC avoided) Power plant with capture and geological storage

NGCC 40 - 90

(140 - 330) 20 - 60

(80 - 220)

PC 70 - 270

(260 - 980) 30 - 70

(110 - 260)

IGCC 40 - 220

(150 - 790) 20 - 70

(80 - 260) Power plant with capture and EOR

NGCC 20 - 70

(70 - 250) 0 - 30

(0 - 120)

PC 50 - 240

(180 - 890) 10 - 40

(30 - 160)

IGCC 20 - 190

(80 - 710) 0 - 40

(0 - 160)

14 IGCC is not included as a reference power plant that would be built today since this technology is not yet widely deployed in the electricity sector and is usually slightly more costly than a PC plant.

significantly) in the specific mix and quantities of different measures needed to achieve a particular emissions constraint (see Figure TS.12), the consensus of the literature shows that CCS could be an important component of the broad portfolio of energy technologies and emission reduction approaches.

The actual use of CCS is likely to be lower than the estimates of economic potential indicated by these energy and economic models. As noted earlier, the results are typically based on an optimized least-cost analysis that does

not adequately account for real-world barriers to technology development and deployment, such as environmental impact, lack of a clear legal or regulatory framework, the perceived investment risks of different technologies, and uncertainty as to how quickly the cost of CCS will be reduced through R&D and learning-by-doing. Models typically employ simplified assumptions regarding the costs of CCS for different applications and the rates at which future costs will be reduced.

2005 2020 2035 2050 2065 2080 2095

Primary energy use (EJ yr-1) MiniCAM

2005 2020 2035 2050 2065 2080 2095

Solar/Wind

2005 2020 2035 2050 2065 2080 2095 Emissions (MtCO2 yr-1)

2005 2020 2035 2050 2065 2080 2095

Conservation and

2005 2020 2035 2050 2065 2080 2095 Marginal price of CO2 (2002 US$/tCO2)

MiniCAM MESSAGE

e

c d

a b

Figure TS.12. These figures are an illustrative example of the global potential contribution of CCS as part of a mitigation portfolio. They are based on two alternative integrated assessment models (MESSAGE and MiniCAM) adopting the same assumptions for the main emissions drivers. The results would vary considerably on regional scales. This example is based on a single scenario and therefore does not convey the full range of uncertainties. Panels a) and b) show global primary energy use, including the deployment of CCS. Panels c) and d) show the global CO2 emissions in grey and corresponding contributions of main emissions reduction measures in colour. Panel e) shows the calculated marginal price of CO2 reductions.

For CO₂ stabilization scenarios between 450 and 750 ppmv, published estimates of the cumulative amount of CO₂ potentially stored globally over the course of this century (in geological formations and/or the oceans) span a wide range, from very small contributions to thousands of gigatonnes of CO₂. To a large extent, this wide range is due to the uncertainty of long-term socio-economic, demographic and, in particular, technological changes, which are the main drivers of future CO₂ emissions. However, it is important to note that the majority of results for stabilization scenarios of 450–750 ppmv CO₂ tend to cluster in a range of 220–2,200 GtCO₂ (60–600 GtC) for the cumulative deployment of CCS.

For CCS to achieve this economic potential, several hundreds or thousands of CCS systems would be required worldwide over the next century, each capturing some 1–5 MtCO₂ per year. As indicated in Section 5, it is likely that the technical potential for geological storage alone is sufficient to cover the high end of the economic potential range for CCS.

Perspectives on CO₂ leakage from storage

The policy implications of slow leakage from storage depend on assumptions in the analysis. Studies conducted to address the question of how to deal with impermanent storage are based on different approaches: the value of delaying emissions, cost minimization of a specified mitigation scenario, or allowable future emissions in the context of an assumed stabilization of atmospheric greenhouse gas concentrations. Some of these studies allow future releases to be compensated by additional reductions in emissions; the results depend on assumptions regarding the future cost of reductions, discount rates, the amount of CO₂ stored, and the assumed level of stabilization for atmospheric concentrations. In other studies, compensation is not seen as an option because of political and institutional uncertainties and the analysis focuses on limitations set by the assumed stabilization level and the amount stored.

While specific results of the range of studies vary with the methods and assumptions made, the outcomes suggest that a fraction retained on the order of 90–99% for 100 years or 60–95% for 500 years could still make such impermanent storage valuable for the mitigation of climate change. All studies imply that, if CCS is to be acceptable as a mitigation measure, there must be an upper limit to the amount of leakage that can take place.

In document AND STORAGE (sider 53-58)